Stocks Crash And Europe Goes Into Total Chaos: Here's What You Need To Know

The Italian debt crisis is blowing up.

First, the scoreboard:

Dow: -389.3 pts, -3.2%
S&P 500: -46.8 pts, -3.7%
NASDAQ: -105.8 pts, -3.9%

And now, the top stories:

• Yesterday’s post-Berlusconi rally was short-lived as Italy’s borrowing costs continue to soar. The yield on the Italian 10-year bond shot north of 7%. Overnight, LCH Clearnet raised the margin requirements to trade Italian debt. This move makes it more expensive to fund trades, and ultimately reduces liquidity in the Italian bond market. This is extremely problematic for debt-laden Italy, which has a crucial bond auction scheduled for tomorrow.
• Meanwhile Greece has yet to pick a new prime minister and form its new unity government. Yesterday, we thought the frontrunner was former ECB VP Lucas Papademos. Now, it looks like it could be someone named Phillippos Petsalnikos.
• By the way, it’s not just Italy and Greece. The spread between German and French bonds are rapidly widening. For More, Here Are All The Major Issues In Europe Right Now >
• Rumors also circulated that the largest eurozone countries would form a core eurozone, separating them from the weaker peripheral countries like Greece. However, an EU official, according to Bloomberg, later denied the rumor.